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Bankruptcy fees leave people in 'financial black hole'

Commenting on today’s insolvency statistics Joanna Elson OBE, Chief Executive of the Money Advice Trust, said:
 
“The ongoing decline in bankruptcy is not necessarily good news. It does not appear to indicate any alleviation of household debt problems, but is instead a dangerous quirk of the current insolvency regime. Our experience at National Debtline and Business Debtline is that many people simply can’t afford to go bankrupt. Finding the requisite £700 (£525 for the deposit plus £175 for the court fee) to petition for bankruptcy simply isn’t feasible, and people are instead left to drift in a financial black hole where they can’t afford to repay their debts, can’t afford bankruptcy, and have no other way out.
 
“Other measures of insolvency with much lower fees now outstrip the numbers going bankrupt, something which five years ago would have been unthinkable.
 
“Insolvency figures are not intended to provide a reflection of the financial health of UK households, and so we cannot draw many conclusions from this data. Whilst inflation has come down over recent months, it continues to outstrip average earnings, especially where London is discounted. The hard reality remains that it takes up more and more of our income to put food on the table, travel to work, and heat our homes. This means lots of households are running a budget deficit of their very own, with many either cutting back sharply on what they buy, or relying on credit to tide them over.
 
Anyone struggling with their finances should see free impartial advice. Advice is available over the phone or email at National Debtline, or online at My Money Steps. An adviser can talk you through your options and help you find a sustainable route to financial health.” 
 
 
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